August Bogina, III v. Medline Industries, Incorpora
809 F.3d 365
7th Cir.2016Background
- Plaintiff Bogina filed a 2011 qui tam False Claims Act (FCA) suit against Medline Industries and the Tutera Group alleging Medline paid bribes/kickbacks to induce purchases by Tutera, causing false claims for government reimbursement.
- Medline previously faced a similar FCA action brought by employee Sean Mason; that suit settled with Medline paying $85 million and Mason receiving a qui tam share; the government released certain civil claims through May 31, 2010.
- Bogina contended he was an "original source" who learned of Tutera-specific kickbacks from a Tutera insider and alleged the fraud extended to Medicare Part B, TRICARE, and state Medicaid beyond the scope of the Mason litigation.
- The district court dismissed Bogina’s federal claims as barred by the FCA public-disclosure/original-source rules because his allegations largely duplicated publicly disclosed allegations in the Mason matter, and then declined supplemental jurisdiction over state-law claims.
- The Seventh Circuit affirmed, finding Bogina’s complaint did not materially add to prior public disclosures and that continuing-fraud allegations pleaded "on information and belief" failed Rule 9(b) particularity requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bogina’s FCA claims are barred by public-disclosure/original-source rules | Bogina claimed he was an original source with independent knowledge (learned from Tutera insider) and added allegations not in Mason | Medline argued Mason’s public complaint and settlement publicly disclosed the same scheme, so Bogina is a "me too" relator and not an original source | Court held Bogina’s allegations did not materially add to public disclosures; suit barred absent original-source status |
| Whether the 2010 amendment to the original-source definition applies | Bogina argued the clarified (2010) definition should govern and he meets it | Medline relied on pre-2010 public disclosures and prior cases treating timing as limiting | Court treated the 2010 amendment as clarifying subsection (B) and applied its standard (knowledge independent of and materially adding to public disclosures) to reject Bogina’s claim |
| Whether differences (naming Tutera, additional programs, alleged continuation past 2010) saved the complaint | Bogina emphasized naming Tutera, coverage of other programs, and alleged ongoing fraud | Medline argued those differences were immaterial because nursing-home sales were already publicly known and settlement put government on notice of broader possibilities | Court held those distinctions were unimpressive and did not materially add to prior disclosures |
| Adequacy of pleading continuing fraud (Rule 9(b)) | Bogina alleged the fraud continued to present but pleaded it "on information and belief" | Medline argued Rule 9(b) requires particularized factual allegations, and information-and-belief pleading is insufficient for fraud claims | Court held continuing-fraud allegations pleaded on information-and-belief lacked required particularity and could not save the complaint |
Key Cases Cited
- United States ex rel. Goldberg v. Rush University Medical Center, 680 F.3d 933 (7th Cir. 2012) (discusses limits on duplicate qui tam suits and public-disclosure bar)
- Glaser v. Wound Care Consultants Inc., 570 F.3d 907 (7th Cir. 2009) (analyzes original-source and public-disclosure doctrines)
- United States ex rel. Gear v. Emergency Medical Associates of Illinois, Inc., 436 F.3d 726 (7th Cir. 2006) (public-disclosure bar discussion)
- Leveski v. ITT Educational Services, Inc., 719 F.3d 818 (7th Cir. 2013) (interpretation of pre-2010 original-source language)
- Middleton v. City of Chicago, 578 F.3d 655 (7th Cir. 2009) (retroactivity principles for statutory clarification)
- Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280 (2010) (construed 2010 amendment as non-retroactive where substantive change occurred)
- United States ex rel. Grenadyor v. Ukrainian Village Pharmacy, Inc., 772 F.3d 1102 (7th Cir. 2014) (Rule 9(b) particularity applied to FCA continuing-fraud allegations)
Outcome: Affirmed dismissal of federal FCA claims; district court properly relinquished supplemental state-law claims.